Store closures hit Gap's Q1 sales, posts 43 percent decline

Gap Inc.’s first quarter net sales were down 43 percent, as the company said, momentum in the first 35 days of the quarter was more than offset by meaningful deceleration in demand after temporary store closures beginning in mid-March. While the company’s first quarter online sales increased 13 percent, store sales decreased 61 percent compared to the first quarter fiscal 2019, driven by temporary store closures.

“Our teams’ ability to pivot quickly and lean into our strong online business resulted in an encouraging 40 percent online sales growth in April. While net sales and stores sales continued to reflect material declines in May as a result of closures, we saw over 100 percent growth in online sales during the month,” said Sonia Syngal, President and CEO of Gap in a statement.

Store closures negatively impact sales across Gap brands

By brand, net sales at Old Navy Global were down 42 percent; store sales were down 60 percent with online sales up 20 percent. Net sales at Gap Global were down 50 percent; store sales were down 64 percent with online sales down 5 percent. Banana Republic Global net sales were down 47 percent; store sales were down 61 percent with online sales down 2 percent. The company’s Athleta brand net sales were down 8 percent; store sales were down 50 percent with online sales up 49 percent.

The company said that gross margin was 12.7 percent, operating loss was 1.2 billion dollars and diluted loss per share was 2.51 dollars.

Beginning May 9, 2020 the company started to reopen stores in select states.

“While we are pleased that store traffic and productivity is exceeding expectations, particularly at Old Navy and Athleta, we continue to plan conservatively as significant uncertainty remains ahead.” said Katrina O’Connell, EVP and CFO of Gap.

Picture:Gap media centre